ALJDEC decisions subject to certification as final

2018A-3455-ROMC-ROC · Registrar of Contractors · 2018-11-01

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 12, 2018 APPEARANCES: Assistant Attorney General John Tellier appeared on behalf of the Arizona Registrar of Contractors. Donald Young appeared on behalf of Respondent Sand Tank Construction, Inc. ADMINISTRATIVE LAW JUDGE: Velva Moses-Thompson _____________________________________________________________________ FINDINGS OF FACT 1. In 1998, Donald Young began working for Sand Tank Construction, LLC (“Sand Tank”). Sand Tank’s owners agreed that in exchange for Mr. Young’s service as a Primary Supervisor and Project Manager, he would accumulate 5% of the company for each year of his employment,. However, Sand Tank’s owners agreed that if Mr. Young did not complete 20 years of employment, all equity gained would be lost. Sand Tank did not file annual reports and certificates of disclosure with the Arizona Corporation Commission which reflected the agreement. 2. On August 19, 2014, the Registrar first granted a qualifying party exemption under Ariz. Rev. Stat. section 32-1125(C) to San Tank, License No. KB2.174267. 3. At the time that the exemption was granted, Tony Davis owned 67% of Sand Tank and David Mendez owned 33% of Sand Tank. 2. On or about July 9, 2018, Sand Tank transferred more than 50% of its ownership interest through a sale of Sand Tank to Donald Young. 3. On or about July 20, 2018, Tony Davis and David Mendez removed themselves as officers and owners of the license. 4. On or about July 31, 2018, the Registrar issued a Notice of Administrative Disqualification Proceeding to Sand Tank, including and requesting that Sand Tank execute a Waiver of Disqualification Hearing. 5. Sand Tank did not execute and return the Waiver. 6. On or about August 27, 2018, the Registrar issued a Citation and Notice of Hearing setting the above captioned matter for hearing on October 12, 2018. The Notice of Hearing provides that the issue for hearing is the charge made in the Citation and Notice of Hearing that Sand Tank violated Ariz. Rev. Stat. section 32-1125(D)(1). 7. A hearing was held on October 12, 2018. 7. The Registrar presented the testimony of its counsel, Bonny Allan, and submitted exhibits 1 and 2. Sand Tank presented the testimony of Melissa Kantor and Donald Young, and submitted exhibits A through D. 8. Melissa Kantor is the wife of Tony Davis. Ms. Kantor testified that Mr. Young has operated the company for the last 20 years. Ms. Kantor stated that her husband and David Mendez intended that Donald Young would acquire total ownership of the company after working at Sand Tank for 20 years. Ms. Kantor testified that she should have updated the filings with the Corporation Commission to reflect that Mr. Young was acquiring an ownership interest of 5% every year, but she mistakenly failed to do so. 9. Donald Young contended that he acquired 5% of the ownership of the company every year that he worked for the company since 1998. Mr. Young contended that Sand Tank should be able to maintain its qualifying party exemption because he has operated the business for the last 20 years. 10. The Registrar did not allege that Mr. Young was incompetent or that the Registrar was attempting to take away Sand Tanks’s contractor’s license. The Registrar contended under the law, Sand Tank must find a qualifying party because it transferred more than 50% of its ownership interest to Donald Young. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction. See Ariz. Rev. Stat. 32-1122. 2. Applicant bears the burden of proof to establish that it meets statutory qualifications for a contractor’s license by a preponderance of the evidence. See Ariz. Rev. Stat. 41-1092.07(G)(1); A.A.C. R2-19- 119; see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). 3. Ariz. Rev. Stat. section 32-1125 (D) provides, in relevant part, as follows: A. a licensee which is exempt from the requirement for a qualifying party pursuant to subsection C of this section may be required by the registrar after a hearing to obtain a qualifying party within sixty days on a finding that:

(1) A transfer of ownership of fifty percent or more of the stock, if applicable, or beneficial interest, in the licensee has occurred.

4. The evidence of record supports the conclusion that Sand Tank transferred more than 50% of its ownership interest to Donald Young. 5. The preponderance of the evidence shows that Sand Tank is not eligible for a qualifying party exemption. RECOMMENDED ORDER Based on the foregoing, it is recommended that the Registrar’s August 27, 2018 Citation be affirmed. It is further recommended that Sand Tank be required to obtain a qualifying party within 60 days following the effective date of the Registrar’s final order. In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be forty days from the date of that certification. Done this day, October 30, 2018.

/s/ Velva Moses-Thompson Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

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Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826